TANZANIA INSTITUTE OF ACCOUNTANCY

(TIA)
COURSE: BBA 3 & BMPR 3 (F/TIME & EVENING 2022/2023)
SUBJECT: PROJECT MANAGEMENT
CODE: BAU08108
TOPIC 5: DEMONSTRATE KNOWLEDGE OF PERFORMANCE INDICATORS IN
BUSINESS OPERATIONS
LECTURER: DR. ANICETH KATO MPANJU

5.0 DEFINE AND IDENTIFY PERFORMANCE INDICATORS

5.1.1 What are Performance Indicators?

Key performance indicators (KPIs) in project management consist of various specific

measurement tools for indicating how well teams are achieving specific goals. Project
management KPIs are generally agreed upon early in the project. They reflect the
organization’s central concept of the project and solidify project responsibility across
administrative divisions.

While each team may have different tasks to complete and roles to play, they
all support the KPIs in their own way. Understanding the role of KPIs in project
management can help build team synergy and provide a framework for the data
collection needed to keep track of organizational project success.

What makes a good KPI?

Choosing which project management KPIs to track and measure is only the first step.
Next, you have to define your KPIs in a manner that gives them clarity and focus. There
are project management KPI templates you can use to help, but it’s most important to
remember to be S.M.A.R.T. With this acronym as your guide, you will be able to create
effective project measures that are:

 Specific
 Measurable
 Attainable
 Realistic
 Time-Bound

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Your KPIs should be agreed upon by all involved parties before initiating a project, and
then measured and monitored as a tool for decision-making during the project.

5.2 EXPLAIN CHARACTERISTICS OF PERFORMANCE INDICATORS

The indicators need to have the following characteristics

 Precise: they can be measured clearly by quantitative or qualitative data.

 Appropriate: indicators should provide measurement of changes that have been
brought about by the project.
 Meaningful: Represent important information about the program for stakeholders.
 Relevant: Reflect the intervention’s intended activities, outputs, and outcomes.
 Direct: Closely measure the intended change.
 Objective: Have a clear operational definition of what is being measured and what
data need to be collected.
 Reliable: Consistently measured across time and different data collectors.
 Useful: Can be used for program improvement and to demonstrate program
outcomes.
 Adequate: Can measure change over time and progress toward performance or
outcomes.
 Understandable: Easy to comprehend and interpret.
 Practical/feasible: The data for the indicator should not be too burdensome to
collect. The indicator should be reasonable in terms of the data collection cost,
frequency, and timeliness for inclusion in the decision-making process

5.3 EXPLAIN TYPES OF PERFORMANCE INDICATORS

The Most Important Project Management KPIs

5.3.1 Timeliness KPIs

1. Cycle Time: The time needed to complete a certain task or activity. This is helpful
for repeated tasks in a project.
2. On-Time Completion Percentage: Whether or not an assignment or task is
completed by a given deadline.
3. Time Spent: The amount of time that is spent on the project by all team
members—or, if you like, by each team member individually.
4. Planned Hours vs. Time Spent: How much time you estimated a project would
take versus actual hours. If the time spent differs from the amount of time

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 anticipated, it’s a flag that you underestimated the resource allocation or budget,
and your timeline may be affected.

5.3.2 Budget KPIs

5. Budget Variance: How much the actual budget varies from the projected budget.
To track this KPI, measure how close the baseline amount of expenses or revenue
is to the expected value.

6. Line Items in Budget: Line items helps owners and managers keep track of
individual expenditures—and provide a more detailed way to see how the budget
was spent.

7. Number of Budget Iterations: The number of budget versions produced before

its final approval. A higher number of budget iterations means more time is being
spent planning and finalizing a budget.

8. Planned Value: The value of what’s left to complete in a project—in other words,
the planned cost of what still needs to be done. For example, if you have a $20K
budget and 30 percent of the project remaining, the planned value of the remaining
work is $6K. Use this project KPI to compare against the actual cost and adjust the
budget if needed.

5.3.3 Quality KPIs

9. Customer Satisfaction/Loyalty: Whether or not someone is satisfied and would

come back again. This can be measured effectively by a survey. This comes more
into play when the project deals directly with a client or customer.

10. Customer Complaints: Keep in mind that the “customer” of a project could be
someone internal—does someone from your organization complain because
someone else isn’t getting things done?

11. Employee Churn Rate: The number or percentage of team members who have
left the company. If your project teams have high turnover, it might indicate the
need to improve management and the work environment. Churn ultimately slows
down projects and creates higher costs for the company in the long run.

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5.3.4 Effectiveness KPIs

12. Number of Project Milestones Completed On Time With Sign Off: There are
different parts within a project—are they being completed in a timely manner?
Additionally, were the milestones completed and approved by the owner or buyer?

13. Number of Returns: If you have a capital project that requires many parts, you
may track the return rate of those parts; this helps you see if you did a good job
planning or adjusting to the project during implementation.

14. Training/Research Needed for Project: You may track this in hours, number of
courses, or something similar. If you need to do a lot of this, your project might get
started later than you hope. Another way of looking at this is asking, “What percent
of resources did you have at the beginning of the project that were qualified to
immediately begin working on the project?”

15. Number of Cancelled Projects: Tracking how many projects have been paused
or eliminated. A high number of cancelled projects could indicate a lack of
planning, lack of goal alignment, or an inability to take on new projects.

16. Number of Change Requests: The number and frequency of changes requested
by a client to an established scope of work. Too many changes can negatively
affect budgets, resources, timelines, and overall quality.

5.3.5 Bonus Project Management KPI

17. Return on Investment (ROI): Encompassing all of the previous four KPI
categories, ROI calculations measure the financial worth of a project in relation to
its cost. Will the project result in a positive payback for the company or client? What
is its financial potential or value? Are there other projects or investments that would
yield a higher ROI? This KPI is often used when determining whether to initiate a
project, or to compare the value of two different projects.

5.4 DESCRIBE RESULT CHAIN

5.4.1 Define Result Chain
A Results Chain is a simplified picture of a program, initiative, or intervention that is a
response to a given situation and includes the logical relationships among the resources
that are invested, the activities that take place, and the sequence of changes that result
(impact).

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In essence, results chains are diagrams that map out a series of causal statements that
link short-, medium-, and long-term results in an “if…then” fashion. As shown in Figure 1,
there are three basic components of a results chain: a strategy, expected outcomes, and
desired impact. Using these components, a project team can then go on to define
objectives and goals that describe desired future outcomes and impacts, respectively.
The Basic Components of a Results Chain Results chains are often derived from
conceptual models. But they differ in that conceptual models show the state of the world
before the project takes action, while a results chain shows the state of the world resulting
from this action. Results chains are similar to the logic models used by many
organizations, but results chains have the added benefit of showing more detail and the
direct relationship between one result and another.

Figure 1. The Basic Components of a Results Chain

Outcome Outcome
Impact on
Strategy (Direct Threat)
Target

Objective Objective Goal

5.4.2 Why Results Chains are Useful

Results chains help project teams accomplish three things:

1. Discuss and Refine Their Theories of Change

Often, project teams implement strategies without really knowing for sure how these
actions will lead to a certain impact; conservation, for instance. They rely on past
experience, expert knowledge, or wishful thinking to guide their selection of strategies.
Whatever the reason, they rarely formally state their assumptions about exactly how their
strategies will achieve their desired outcomes and impacts. As shown in Figure 2, it is
likely that they have many implicit assumptions about how their strategies will contribute
to achieving conservation – these series of assumptions represent their “theory of
change.” At the same time, it is not uncommon for members from the same team to hold
different assumptions that they have not communicated with one another. Because the
assumptions are not explicit, the project team cannot come to an agreement on their
theory of change or test it and learn over time whether it is valid.

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Figure 2. Implicit Assumptions

Conservation
Strategy ? target
improved

2. Measure Effectiveness
Once a project team has come to agreement on their theory of change, they can use their
results chain to define their project objectives and indicators needed to measure
effectiveness. An objective is a desired result that is specific, measurable and time-bound.
Determining a project’s objectives is often a struggle for project teams. It is quite common
for teams to try to develop objectives that are merely shorter-term versions of their goals.
It is also quite common for teams to just try to brainstorm objectives without considering
what should qualify as an objective. Results chains help teams avoid both of these
common errors because they explicitly lay out all the results that a team should consider
for setting objectives. Because objectives should be tied directly to results, the team
should only set objectives for the results they specified in their results chains. Thus,
results chains help teams narrow down a huge universe of potential objectives to those
that will help them determine if their theories of change hold.

3. Develop a Common Framework for Cross-Site Learning

Finally, results chains can help practitioners learn across sites. Project teams working in
different sites are often implementing the same strategies and have common
assumptions about how these strategies will contribute to conservation. Results chains
can provide a framework for defining and testing these common assumptions and
learning about the conditions under which a strategy is or is not effective, and why.
For example, two projects operating in different parts of the country or even the world
might be using a similar community capacity building strategy for forest resource
management to ultimately influence the direct threat of illegal selective logging and
ensure the conservation of primary forest (Figure 3). Project A is using the strategy to
help indigenous communities understand their legally-granted rights and assert these
rights. The team assumes this will lead to greater control over external actors and this, in
turn, will help communities confiscate illegal wood, thus reducing illegal selective logging
and conserving the primary forest. Project B is using the community capacity building
strategy to train indigenous community members to enforce forestry laws. Trained
members would then work directly with government enforcement officials to enforce
forestry laws. As with Project A, the team assumes this would lead to more control and
vigilance over external actors, more illegal wood confiscated, and less illegal selective

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logging. As Figure 3 illustrates, these two projects operating at separate sites share many
assumptions in common. By explicitly laying out those assumptions in a results chain,
they would have a framework for defining and testing the common assumptions and
learning about the conditions under which this community capacity building strategy is or
is not effective, and why.

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Figure 3. Overlap in Results Chains for Community Capacity Building in 2 Projects

Community
capacity Greater Less illegal
Greater
control of & More illegal selective Primary
building for indigenous
Project A vigilance of wood logging in forest
forest knowledge
external confiscated indigenous conserved
resource about rights
management actors communities

Community Greater Less illegal

capacity Communities More illegal selective
Communities control of & Primary
Project B building for capable of assist gov’t in vigilance of
wood logging in forest
forest enforcing confiscated indigenous
enforcement external conserved
resource forest laws efforts actors communities
management

Community Greater Less illegal

Overlap in capacity control of & More illegal selective
results from building for vigilance of wood logging in Primary
Projects A & B forest external confiscated indigenous forest
resource actors communities conserved
management

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5.4.3 Types of Result Chain
The results chain is a description of the various stages of an intervention that lead to the
changes that are intended – from the inputs at the start, to the end effects at a societal
level for the beneficiaries. The results chain is often drawn as a series of five or six boxes,
as shown in Figure 4.

The first three links in the chain are under the control of the implementer and present no
major issues for monitoring and quality management.

(a) Inputs: Funding, staff, vehicles, etc. Easily monitored by administrative, accounting
and audit procedures.

(b) Activities: What the intervention does. Easy to monitor by standard record keeping
of activities.

(c) Outputs: Anything that we make, do or buy as a result of inputs and activities. The
output of landmine clearance is safe land, the output of a training session is people
with more skills and knowledge, the output of risk education is people with more
knowledge about safe behavior. Outputs are often straightforward for monitoring and
QM.

The last three links of the chain are what the donor, implementer and/or beneficiaries
want to achieve. They are less and less under the control of the implementer as we
move along the chain, and more difficult for monitoring and quality management.
These results links are all based on behavior change where the definition of “behavior”
also includes attitudes and decision making.

(d) Immediate outcomes: Behavior changes by people other than the donor and
implementer, usually a direct result of the outputs. Usually behaviour change by
people who are stakeholders. The outcome of landmine clearance is when cleared
land is used productively (a behavior change from avoiding the land due to mines to
making use of the land), the outcome of training is when people who have been
trained start to use their new skills and knowledge, the outcome of risk education is
when people demonstrate reduced risk behavior in their everyday lives.

(e) Medium-term outcomes or intermediate outcomes: Downstream behavior

changes by people who have little or no direct involvement in the intervention.
Measurement and QM of medium-term outcomes can present challenges. One
medium-term outcome of land that has been cleared of mines and then used for
agriculture is increased food supply within the community. People not directly involved
in the project may benefit if there is more food available in the local marketplace. A
medium-term outcome of training people how to develop better plans is when the
better plans are adopted and implemented, a medium-term outcome of risk education

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 is when people who did not attend the sessions adopt safe behavior because they see
and learn from the safe behavior of friends, neighbours and family members who
received training.

(f) Impacts: Usually defined as societal-level changes (rather than individual changes)
that eventually result from an intervention, and can include both direct and indirect
effects as well as both positive and negative effects (this is a very similar definition to
the way “impacts” is defined in evaluation criteria). Improved nutritional status of
children in a village may be the long-term result of clearing mines from farmland, this
improvement may happen more quickly if more people get their land cleared sooner
due to the impact of better planning. Measuring impacts is difficult, and requires a
long-term commitment beyond the end of the project for the effects to be realized.
Very few interventions make any real provision to continue learning after the end of a
project and instead it is common to incorrectly label a few immediate
outcomes as impacts in order to supply data. Impacts frequently fall into four broad
categories: health (including nutrition, etc.), wealth (economic benefits of any type),
wellbeing (social, educational, emotional) and compliance with legal or political
commitments (e.g. a national poverty reduction strategy).

The results chain is a highly simplified, linearized view of a complex social process and
is not suitable for interventions that are fully within the “complex domain”. Simplification
is necessary to make planning possible. The key step is the link between outcome and
outputs. This model is suited to linear or ordered systems and even though it is often
used in complex environments, the lack of evident cause and effect in complex adaptive
systems means that it is not really suitable.

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Figure 4: Results chain & results chain diagram – Example of Widely used six-box Results Chain Diagram

Project Immediate Medium Term Society

Inputs Activities level
Outputs Outcomes Outcomes
Impact
Resources Training in Planning People have new People use new New plan adopted by Results of better
People skills planning skills planning skills government planning to
Skills Building new road New road ready New road used by Local commerce better life
Knowledge farmers improves Poverty reduced,

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REVIEW QUESTIONS
Question 1
(a) What is key performance indicators (KPIs)?
(b) What makes effective KPIs?

Question 2
What are the main attributes of key performance indicators?

Question 3
Explain major types of key performance indicators (KPIs)

Question 4
(a) What are results chain?
(b) Explain the usefulness of results chain.

Question 5
Mention and explain types of results chain.

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